Tokenized silver futures have seen one of the largest wipeouts in crypto markets, surpassing bitcoin and ether. Hedge fund manager Michael Burry, known for 'The Big Short,' described this phenomenon as a 'collateral death spiral.' Falling prices are forcing liquidations, creating a vicious cycle that further tanks values. Burry highlighted that on at least one crypto venue, silver liquidations exceeded those of bitcoin.

The chaos was not merely a bitcoin issue; it stemmed from rapid movements in metals that clashed with excessive leverage and thin liquidity. As the market shifted, tokenized silver futures became a focal point, logging significant losses. Burry pointed to Hyperliquid, a crypto market where silver-linked liquidations briefly overtook bitcoin's.

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Traders often use tokenized metals to bet on gold, silver, and copper via crypto platforms, which trade continuously and require less initial capital. However, this setup can lead to forced selling during volatility. With traditional markets tightening risk parameters, margin requirements for gold and silver futures increased, burdening leveraged traders.

As traders struggled to meet these demands, liquidations surged, reflecting a broader trend. The implications are profound: crypto venues are morphing into alternative platforms for macro trades, leading to unexpected liquidation dynamics. The landscape is shifting, and traders must adapt to these emerging realities.